Disappointed with your typical investment returns?
Leading hedge fund researchers have discovered what ScoreGenix already knows from years of experience: Sports trading can not only diversify traditional assets, but it can also significantly outperform them.
According to research analysts at Long Rock Capital, a prominent UK hedge fund, sports trading can serve as a source of uncorrelated excess returns. By making systematic investments in wagering strategies, the data was clear: Sports trading can provide strategic diversification, outperforming both S&P 500 and hedge fund managers.
Sports trading can provide an attractive option to investors as an alternative asset to generate excess returns which are uncorrelated to their existing portfolio.”
– Long Rock Capital (a UK hedge fund)
For their considerable tests over a 6 years span, the researchers modeled a strategy of sports wagering in the horse racing niche, they relied heavily on historical data, using a simple strategy of “laying.” Simply put, laying refers to betting against an event occurring. In this case, it involved the four horses most favored to win each event.
To their delight, returns significantly outperformed the S&P 500 on average, as well as the Credit Suisse Hedge Fund Index.
“This shows the potential of sports trading strategies as an alternative investment and a unique way of gaining uncorrelated exposure to the market,” noted the researchers.